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It’s Not Culture

Does the culture of a society determine its development prospects? One of the hardest things about evaluating this claim is to actually define what culture is. Lawrence Harrison seems to associate it, reasonably, with the values and attitudes that people have in society. This gives culture a normative slant, and this is consistent with his subsequent emphasis on religion. This definition of culture, which I think is a useful one, distinguishes it from more positive beliefs about how people will behave. There is a big difference, for example, between “Will I be punished if I cheat someone?” and “It is wrong to cheat someone.” Defined in this way, Lawrence Harrison argues that the culture of a society is one of the crucial things, maybe the crucial thing, which determines its prosperity. I agree that this might be true, but I know of no really convincing social science evidence that this is the case and I do not believe that the arguments and evidence that Lawrence Harrison provides convince.

He begins by arguing that the primary role of culture is obvious from the fact that “in multicultural countries … some ethnic or religious minorities do much better than majority populations, as in the case of Chinese minorities in Indonesia.” But this fact is consistent with many different theories. For one thing, the fact that minorities do well may be because dominant groups allow them to do well. In Ghana in the 1960s, President Nkrumah favored Lebanese businessmen because their wealth was not threatening politically to him. In contrast, the emergence of a Ghanaian business class was. This emerges in the analysis of Killick of the attempt by the government of Nkrumah to promote industrialization. Killick notes:

Even had there been the possibility [of creating an indigenous entrepreneurial class] it is doubtful that Nkrumah would have wanted to create such a class, for reasons of ideology and political power. He was very explicit about this saying `we would be hampering our advance to socialism if we were to encourage the growth of Ghanaian private capitalism in our midst.’ There is evidence that he also feared the threat that a wealthy class of Ghanaian businessmen might pose to his own political power. [1]

In this context, it is interesting that Nkrumah’s solution to consolidate his power was to limit the size of businesses that Ghanaians could own. This caused problems for his industrialization policy, which he got around by allowing foreign businessmen to enter Ghana. Though this was inconsistent with his aggressively nationalistic and anti-imperialistic rhetoric, these businessmen did not pose a domestic political threat. Killick notes “Given Nkrumah’s desire to keep Ghanaian private businesses small, his argument that ‘Capital investment must be sought from abroad since there is no bourgeois class amongst us to carry on the necessary investment’ was disingenuous.” [2] He goes on to add that Nkrumah “had no love of foreign capitalists but he preferred to encourage them rather than local entrepreneurs, whom he wished to restrict”. [3]

The Lebanese were not differentially successful because they had a “progress prone culture,” but because they received favors from politicians. The same was true of Indian businessmen in Kenya during the Presidency of Daniel Arap Moi and indeed of Chinese businessmen in Indonesia during the regime of President Suharto. [4]

There are doubtless other reasons why minorities do well. For one, the Chinese who move to other countries are a highly selected, and possibly differentially entrepreneurial, sample. I agree that the success of such minorities is interesting, but I do not agree it shows the importance of culture. Another hypothesis could just be that since such groups tend to interact more frequently with each other than members of the general population do, they are able to cooperate and support each other better, for example, by lending each other money to start businesses or send their children to school.

There is an additional problem here. If the Chinese do well in Indonesia because they have such a good culture, then why is China one of the world’s poorest countries? An answer for this question emerges later in the paper where China is argued to be “an economic success story.” But surely the culture which supposedly is conducive to prosperity in China is an old one and long predates the acceleration of growth which took place in the late 1970s. Lawrence Harrison attributes this to Deng Xiaoping’s pronouncement that “To get rich is glorious,” but also notes that the “incentives were in place.” So culture was held constant and institutions and policies changed while growth accelerated. From this it seems to follow that the reasons countries are poor has nothing to do with culture but rather policies and institutions that do not create the right incentive environment. It could be, of course, that if one got the incentives right in Africa, then there would be no growth because the culture would not be consistent with it, but I doubt this. The example of Botswana is against it, and every African I know thinks that to get rich is glorious or, if not glorious, then at least desirable (probably more so than to a British person like myself!)

So to me this does not add up to convincing evidence for the role of culture. If a country clearly characterized by an adverse culture, such as Ireland or Spain, does well, then it must be because they are “post-Catholic.” If India was once rich, then this “suggests the presence of Universal Progress Values in Indian culture.” By this argument Argentina in 1920 must have had a good culture for economic development since it was amongst richest countries in the world. Where did that go?

What about Chile, the one Latin American success story? Lawrence Harrison argues that Chile has a unique culture, but then why did it manifest itself so recently? It is only since the mid-1980s that the growth path of Chile has distinguished it from other Latin American countries. Though Lawrence Harrison sees Chilean culture was different historically, I doubt this. Until 1958 rural elections were highly fraudulent and agricultural workers coerced into voting for the candidates their employers favored. [5] Indeed, the praised Carabinieros were deeply implicated in this fraud and in stopping attempts to develop more democratic institutions. According to a former minister of interior in the 1940s, Arturo Olavarria: “a group of carabinieros would arrive at a fundo accompanied by a convoy of trucks. When the inquilinos were assembled in the area, the carabinero officer would order those who wished to continue the strike to stand on his left. The officer would then order that the strikers gather their families, cats, dogs, chickens and belongings and get in the trucks to be evicted. … This tactic I converted into a system … as the good ones went on the right and the bad ones on the left, as I hoped will occur one day in the valley of Josafat.” [6]

So culture might matter, but doubters like me will not be convinced by the evidence here. Also though I work too much and neglect my family more than I should I cannot help feeling there is something wrong with aspiring to live in a society where we “Live to work.” It sounds too much like the sort of slogan George Orwell might have come up with.

[4] See, for example, Michael T. Rock, “The Politics of Development Policy and Development Policy Reform in New Order Indonesia,” University of Michigan, William Davidson Institute Working Paper #632, 2002.

[5] See Jean-Marie Baland and James A. Robinson, “Land and Power : Theory and Evidence from Chile,” NBER Working Paper #12517, 2006.

Also from this issue

Lead Essay

In this month’s information-packed lead essay, Lawrence E. Harrison notes that the role of culture has been badly neglected in serious studies of economic devewlopment. But then, he asks, what explains “why, in multicultural countries where the economic opportunities and incentives are available to all, some ethnic or religious minorities do much better than majority populations?” Harrison reports some results of his recent Culture Matters Research Project, including the finding that “Protestant, Jewish, and Confucian societies do better than Catholic, Islamic, and Orthodox Christian societies…” Harrison provides a number of incisive country case studies, illustrating different ways pre-existing culture can produce economic results, and the ways policy and politics can transform culture.

Response Essays

In his reply to Harrison’s lead essay, University of California, Davis economist Gregory Clark writes, “I simultaneously want to endorse [Harrison’s] promotion of culture, and to run screaming from his lethal embrace.” While agreeing that the failure of purely institutional explanations of historical economic growth “opens the door … for culture,” Clark argues that “attempts to introduce culture into economic discussions so far have been generally either ad hoc, vacuous, blatantly false, or void of testability.” Clark points to great variation in economic performance within cultures and religions, and worries that Harrison’s “measures are not a pure probe into the essence of local cultures, but reflect institutions and economic environments that change the real possibilities for people.”

In his reply to Lawrence Harrison’s lead essay, George Mason University economist Peter J. Boettke argues that it is not culture but institutions—“the rules of the game that govern the way that people interact with one another”—that are the primary determinant of economic growth. However, culture may be crucial, Boettke argues, since it is “a tool for the self-regulation of behavior” that may raise or lower the cost of monitoring and enforcing compliance with “the rules of the game.” And that can make the difference between the success or failure of growth-conducive institutions and policies such as “private property, freedom on contract, limited scope of regulation, monetary restraint, fiscal responsibility, and open trade.”

James A. Robinson of the Harvard University Department of Government argues that Harrison’s measures are insufficient to establish that culture is the x-factor in economic development. For example, Robinson argues that the relative success of certain ethnic and religious minorities may be due to concessions from the majority group, and not the features of the minority culture. Also, Robinson asks, if the economic success of Chinese minorities in other countries is “because they have such a good culture, then why is China one of the world’s poorest countries?” And if Chile’s success lies in its distinctive culture, “then why did it manifest itself so recently?” Robinson concludes that “culture might matter, but doubters like me will not be convinced by the evidence here.”

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